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Philippine reserve assets down to $99.3B in February

Philippine dollar reserves slipped in February as the national government withdrew from its deposits to pay for debt and other programs, data released by the Bangko Sentral ng Pilipinas (BSP) revealed.

The gross international reserves (GIR) fell to $99.310 billion in February, lower than the upward-revised $100.665 billion in January.

The GIR level — a measure of the ability to settle import payments and service foreign debt — compares with the $107.801 billion in February 2021.

The central bank’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights.

“The month-on-month decrease in the GIR level reflected mainly the national government’s net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the BSP said.

Latest data available from the Bureau of the Treasury (BTr) showed that the government’s debt swelled to a record-high P13.7 trillion as of end-January, up 2.1% or P279.63 billion from the previous month.

The central bank also attributed the decline to the downward adjustments in the value of its gold holdings as international market prices dropped.

Despite the decline, the central bank said the latest level remains a “more than adequate” external liquidity buffer, equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.

It is also equivalent to 6.1 times the country’s short-term external debt based on original maturity, and 4.1 times based on residual maturity.

Meanwhile, the net international reserves — the difference between the reserve assets and reserve liabilities — fell to $99.3 billion from $100.6 billion in January.

In a separate commentary, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said the latest figure is still above the minimum international threshold of three to four months' worth of imports.

“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, exports (though offset by imports), relatively fast recovery in foreign tourism revenues,” he said.

Latest data show that cash remittances climbed by 5.8% to $3.16 billion in December, while exports for the month stood at $5.667 billion.

“Thus, still relatively high GIR at $99.3 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings for the second straight year,” Ricafort said. —VAL, GMA Integrated News